LONDON (ICIS)–On 11 July the first auction results from the German H2Global programme were released, providing the European hydrogen market critical information on the green premium across the supply side as ammonia participants switch to lower-carbon, cleaner products. H2Global is a double auction system that procures international volumes of hydrogen and re-sells them domestically, providing a subsidy based on how low the sell price of the market is against how high the buy price is. ICIS has produced the following infographic to contextualise the update.

LONDON (ICIS)–Ursula von der Leyen on Thursday secured her re-election to a second five-year term as President of the European Commission, and identified competitiveness as the most pressing issue facing the EU. Following a June European parliamentary election season that saw liberal and centrist political blocs hold on to majority power but cede ground to right-wing and Eurosceptic parties, von der Leyen’s position as leader of the bloc was reaffirmed on 18 July. A total of 401 Ministers of European Parliament (MEPs) backed von der Leyen’s candidacy, equating to roughly the number of members linked to the centrist European People’s Party, left-wing Progressive Alliance of Socialists and Democrats, and  liberal group Renew Europe. A total of 360 votes in favour of von der Leyen were necessary to secure a majority. Of the 719 total MEPs, 284 voted against her, and 22 submitted blank or invalid votes, according to European Parliament. Chemicals sector representatives have expressed hopes that the next term of the European Parliament will feature a stronger focus on industrial competitiveness, in light of the impact of high energy prices on the long-term viability of some sectors. ““If you read the State of the Union, there are a number of statements which clearly indicate industry policy is back, that it will get, if not the deepest political priority, as there are issues like Ukraine, it will get political priority in the next commission,” Cefic director general Marco Mensink said, speaking in October 2023. The impact of higher energy prices on operating costs and the rollout of more cash-heavy subsidy frameworks elsewhere, such as the US Inflation Reduction Act, have intensified pressure on European industry. “Our competitiveness needs a major boost,” von der Leyen said, addressing MEPs earlier on Thursday. “The fundamentals of the global economy are changing. Those who stand still will fall behind. Those who are not competitive will be dependent. The race is on and I want Europe to switch gear,” she added. This push on competitiveness is likely to be focused on reducing the administrative burden on companies in the region and prioritising faster permitting, she added. Von der Leyen also intends to launch a Clean Industrial Deal within the first 100 days of her new term, she added, to channel investment in infrastructure and industry decarbonisation, particularly for energy-intensive sectors. Germany-based chemicals trade group VCI welcomed von der Leyen’s re-election, but warned that Europe is at a crossroads in terms of its future trajectory. “We are at a turning point that will decide the future of Europe. Will we manoeuvre ourselves further into the side lines as a business location or back on the road to success? The new Commission must act decisively to balance sustainability and industrial competitiveness,” said VCI CEO Wolfgang Grosse Entrup. No deviation is expected in the bloc’s 2030 and 2050 decarbonisation goals, despite growing murmurs that the EU is not on track to meet the 2030 targets with just over six years still remaining to build out infrastructure. “So I want to be clear. We will stay the course on our new growth strategy and the goals we set for 2030 and 2050. Our focus now will be on implementation and investment to make it happen on the ground,” von der Leyen added. Focus article by Tom Brown. Thumbnail photo: Ursula von der Leyen, speaking in Strasbourg, France, after winning re-election as European Commission President on 18 July 2024. (Source: Ronald Wittek/EPA-EFE/Shutterstock)

HOUSTON (ICIS)–The US chemical industry could see the return of some popular trade and chemical-safety programs later this year, and customers of the major railroads could get their first chance to switch carriers if they get bad service. The year is turning out to be a busy and potentially productive one despite the presidential election Key trade and security bills for the chemical industry could pass during the lame duck session, which falls between the November 5 election day and the January 20 inauguration Globally, the final round of negotiations for the UN plastics treaty should take place near the end of the year UN PLASTICS TREATYThe concern of the chemical industry is that the ratified plastic treaty could include caps or curbs on the production of plastic. Companies such as BASF have advocated that the treaty should focus on curbing pollution instead. Chemical companies have noted a growing consensus around the industry’s views, leading them to be optimistic about the upcoming negotiations. The next round of talks is scheduled for November 25 through December 1 in Busan, South Korea. Formal ratification could take place in early 2025. RECRIPROCAL SWITCHING MAY GET FIRST TRIALReciprocal switching in the US will become effective in September, which will allow chemical companies to switch rail carriers if they can demonstrate substandard service. Reciprocal switching will be limited to Class 1 railroad companies, which are the biggest carriers. Redress for bad service is not automatic, and the process will require time, effort and legal fees on the part of chemical companies. “The question is how laborious and costly will that process be when you file a complaint?” said Eric Byer, president of the Alliance for Chemical Distribution (ACD) the new name for the National Association of Chemical Distributors (NACD). Still, it is possible that a chemical company upset with its rail service takes the plunge and files the first request for reciprocal switching. NEW RAIL BILL AND POSSIBLE TANK CAR BANA rail safety bill that passed the Senate shortly after the Norfolk Southern train derailment in Ohio state has recently received momentum that could push it into law. That momentum is coming from HR 8996, a sister bill that was introduced in the House of Representatives by Troy Nehls (Republican-Texas) and Seth Moulton (Democrat-Massachusetts). Related to the bill is a possible ban on DOT 111 tank cars. The ban is also connected to the derailment, since it is part of a settlement agreement between the US and Norfolk Southern. The agreement proposes that Norfolk Southern stop using its own DOT-111 tank cars and that it encourages its customers to do the same. The ACD is concerned that the agreement could be the first step in an outright ban of DOT 111 tank cars. Such a ban could take place before the industry has time to replace the tank cars. Hazardous materials would then be shipped by truck, which is more dangerous. A ban would also disrupt the movement of chemicals if it happens too quickly. REVIVAL OF CHEM SECURITY PROGRAMLegislators could revive the nation’s main anti-terrorism program for chemical sites, which is known as the Chemical Facility Anti-Terrorism Standards (CFATS). CFATS has been inactive for about a year, after a bill that would have re-authorized it was blocked by US Senator Rand Paul (Republican-Kentucky). While CFATS has lost its authorization, it has not lost funding. Were Congress to re-authorize CFATS, employees who were associated with the program could be reassigned to it. Senators could attempt to revive CFATS through an amendment to the National Defense Authorization Act (NDAA), Byer said. That could happen later in September or during the lame duck legislative session, Byers said. Another tactic would add an amendment to the appropriations bill, he said. Congress will likely consider the appropriations bill during the lame duck session. REVIVAL OF TRADE PROGRAMSTwo trade programs popular with the chemical industry could also be revived during the lame duck session. The Generalised System of Preferences (GSP) expired at the end of 2020, and it eliminated duties on thousands of products from more than a 100 developing countries. Prior to its expiration, the GSP had existed for decades. Byer said a bill could bring back the GSP program and make it retroactive to January 1, 2021. If such a bill becomes law, companies would receive rebates for the taxes they paid while the GSP program was inactive. The GSP has typically been coupled with another expired trade program, known as the Miscellaneous Tariff Bill (MTB), Byer said. The MTB temporarily reduced or suspended import tariffs on specific products, and it could be packaged with any other legislative action that would revive the GSP. ELECTION SEASON TO LIMIT NEW BILLS, POLICIESOutside of the trade and security bills, Byer does not expect a lot of new legislation because of the elections. Similarly, the pace of new policies and rulemaking at federal agencies should slow down. Any regulatory relief would be a welcomed change because the first half of 2024 was the worst regulatory climate that the chemical industry has ever seen, Byer said. The regulatory climate could change after the elections on November 5. Otherwise, the chemical industry may have to turn to the courts to challenge policies that have a questionable basis and a harmful effect on companies. Insight article by Al Greenwood Thumbnail shows plastic waste. Image by HOTLI SIMANJUNTAK/EPA-EFE/Shutterstock

MADRID (ICIS)–Supply of ethane from Pemex to polyethylene (PE) producer Braskem Idesa is now more stable after a renegotiation of the contract – but the global PE market remains in the doldrums, according to an executive at the Mexican firm. Sergio Plata, head of institutional relations and communications at Braskem Idesa, said a recovery in global PE prices could start in the second half of 2025 as the market is expected to remain oversupplied in the coming quarters. Plata explained how Braskem Idesa had to renegotiate the terms of an agreement with Pemex, Mexico’s state-owned crude oil major, for the supply of natural gas-based ethane, one of the routes to produce PE, to its facilities in Coatzacoalcos. Supply is now more stable and in the quantities agreed, he said. Braskem Idesa operates the Ethylene XXI complex in Coatzacoalcos, south of the industrial state of Veracruz, which has capacity to produce 1.05 million tonnes/year of ethylene and downstream capacities of 750,000 tonnes/year for high-density polyethylene (HDPE) and 300,000 tonnes/year for low-density polyethylene (LDPE). Braskem Idesa is a joint venture made up of Brazil’s polymers major Braskem (75%) and Mexican chemical producer Grupo Idesa (25%). ETHANE FLOWING, TERMINAL IN Q1 2025 Pemex agreed with Braskem Idesa to supply the PE producer with a minimum volume of 30,000 barrels/day of ethane until the beginning of 2025, when Braskem Idesa plans to start up an import terminal in Coatzacoalcos to allow it to tap into exports out of the US Gulf Coast. However, both parties sat to renegotiate that agreement after Pemex’s supply proved to be unstable, with credit rating agencies such as Fitch warning in 2023 of the “operational risk” such a deal with the state-owned major represented for Braskem Idesa. The outcome of the renegotiation is starting to bear fruit, explained Plata diplomatically, without providing any details. He conceded, however, that to outsiders, Pemex’s businesses could look rather odd. “We understand the positions of a public entity such as Pemex, and we understand its methods could look questionable to eyes outside our relationship,” said Plata. “However, at Braskem Idesa we were confident that if we sat down with them to renegotiate, clearly stating what we require from each other, we could reach a point in the renegotiation which worked for us as a company and for the Mexican petrochemicals sector as a whole.” Together with more stable supply from Pemex, Braskem Idesa also adopted the so-called Fast Track to import ethane while its own import terminal starts up. The terminal, known as Terminal Quimica Puerto Mexico (TQPM), closed the last financing details at the end of 2023. Plata said the terminal would start up “without a doubt” by the beginning of 2025, adding that construction was 70% complete by the beginning of July. According to Plata, with Pemex’s more stable ethane supply and the Fast Track system, Braskem Idesa is operating at 70-75% capacity utilization. Braskem Idesa (in $ million) Q1 2024 Q1 2023 Change Q4 2023 Change Q1 2024 vs Q4 2024 Sales 229 234 -2% 199 15% Net profit/loss -85 1 N/A -101 -16% EBITDA 36 26 36% 26 39% PE sales volumes (in tonnes) 205,500 195,100 5.4% 174,500 17.8% “We have had a very complex environment, with increased capacities in the US or China and with the war in Ukraine raising our production costs. We are undoubtedly in a down cycle and as a company we have tried to take care of our margins by controlling our costs and look closely at our investments,” said Plata. He said he “would not have the answer” about what to do with China’s dumping of product around the world, a fact that in Brazil, the largest Latin American economy, has prompted chemicals trade group Abiquim to lobby hard for higher import tariffs in polymers, as well as dozens of other chemicals. “Market analysts predict the current cycle may come to an end in the second half of 2025. Let’s hope so… This has been such a long crisis, aggravated by external factors such as wars and global convulsions, which undoubtedly also affect the industry, and the environment remains very uncertain.” Front page picture: Braskem Idesa’s facilities in Coatzacoalcos Source: Braskem Idesa Interview article by Jonathan Lopez Next week, ICIS will publish the second part of the interview with Plata, with his views on the challenges and opportunities for the chemicals and manufacturing sectors under the upcoming Administration led by President-Elect Claudia Sheinbaum amid the nearshoring trend

SHANGHAI (ICIS)–In this podcast, markets reporter Shannen Ng discusses how northeast Asia’s methylene diphenyl diisocyanate (MDI) supply is expected to remain tight as Q3 progresses. However, poor demand expectations in the Asian import markets for the rest of this quarter remain. Polymeric MDI sentiment in SE Asia, India supported by tight supply Monomeric MDI particularly sluggish and expected to remain so Weak demand outlook for China’s downstream construction and automotive sectors

LONDON (ICIS)–Europe’s run up to holiday season has been unusually busy for polyethylene (PE) and polypropylene (PP) markets, including some spot prices reversing for the first time since March 2024. In this ICIS podcast, European PE and PP senior editors Vicky Ellis and Ben Lake pick out July’s big themes, from logistics (hurricane Beryl and still-spiked Asian freight rates) to the mismatch between how local suppliers and converters are experiencing demand this month. They also highlight what to watch for August. Editing by Damini Dabholkar

SINGAPORE (ICIS)–Shipping disruptions affecting Maersk’s container shipping operations because of the Red Sea crisis have extended beyond the Far East-Europe routes to its entire global network, the shipping and logistics giant said. The fallout of the Red Sea crisis is continuing to cascade across the world, forcing vessels to temporarily divert and take longer routes around the Cape of Good Hope, thereby causing unprecedented challenges for global supply chains. The disruptions now extend beyond the primary affected routes, causing congestion at alternative routes and transshipment hubs essential for trade with Far East Asia, West Central Asia, and Europe, Maersk said in a statement on 17 July. Ports across the Asia Pacific, including Singapore, Australia, and China, are experiencing delays due to congestion. The coming months will be challenging for carriers and businesses alike, as the Red Sea situation stretches into the third quarter of this year, Maersk CEO Vincent Clerc said. Maersk operates around 740 ships across its various divisions, including container ships, tankers, and other specialized vessels. Extending rotations to travel the longer route around Africa takes two to three ships, depending on the trade in question, he said. “We are going to have in the coming month missing positions or ships that are sailing that are significant different size from what we normally would have on that string, which will also imply reduced ability for us to carry all the demand that there is,” Clerc said. The availability of additional capacity was low to begin with and, across the industry, carriers’ ability to bring in extra tonnage has been limited, he said, adding that at the same time, demand for container transport has remained strong. ASIA EXPORTERS’ WOES TO CONTINUE For Asia, the impact of the ongoing Red Sea Crisis is more on exports rather than imports, Maersk said. This is primarily because Asian countries are major global exporters. China, Asia’s biggest economy and the second-biggest in the world, is also the largest exporter to many Asian countries. Routes between the Far East – which spans east southeast Asia – and Europe via the Suez Canal have been directly impacted, with disruptions in the Red Sea affecting most trade routes. “First, hubs in Asia are being impacted with congestion across key ports, causing delays and bottlenecks to ripple through the entire system,” Maersk said. “Second, ocean networks have been reorganised with vessels being moved to different regions to better meet demand for capacity.” This has led to a widening global impact that has affected regions that weren’t originally directly affected by the Red Sea disruption. Intra-Asia shipping routes are also facing equipment shortages, especially out of China, impacting the entire industry. Initially affecting long-haul routes, the scarcity now extends to shorter regional routes. This leaves carriers like Maersk with a difficult choice: prioritize returning empty containers to China or shipping full containers to other destinations, both options translate to increased costs and contributing to further supply chain disruptions. “We are also approaching typhoon season, which is expected to impact East China and South China, creating further risks of congestion,” the shipping giant said. Focus article by Nurluqman Suratman

SINGAPORE (ICIS)–In this podcast, Asia ethylene editor Josh Quah and analyst Aliena Huang discuss the factors impacting arbitrage flows of ethylene from the US to Asia. Spot arbitrage window between US and Asia closed but term arrivals for July remain healthy Storm Beryl, low affordability in Asia, may keep spot arbitrage trades closed into Aug Panama Canal traffic levels expected to return to pre-congestion levels by Oct

SINGAPORE (ICIS)–In this podcast, ICIS analysts Patricia Tao, Lewis Unstead and Aliena Huang delve into how the upcoming CBAM (Carbon Border Adjustment Mechanism) will impact China’s export-oriented manufacturing sectors and hydrogen’s crucial role in its low-carbon economy. China’s national energy law draft includes hydrogen, marks shift toward low-carbon industry Move comes ahead of EU’s CBAM CBAM to affect global trade, particularly for high-emission products